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French eye €500m with tech tax

March 6, 2019

From Pascale Paoli-Lebailly in Paris

French Minister for the Economy and Finances, Bruno Le Maire, has presented his proposal to tax tech giants in the Council of Ministers.

It would introduce a 3 per cent tax on digital services and will be retroactive to January 2019. The French tax will be applied to all tech companies whose worldwide revenues exceed €750 million and €25 million in France. Targeting ad generated revenues, data sales and commissions paid to platforms, it will affect the US FAANGs and also Chinese groups as well French and European mid-size tech companies like Criteo. It is forecast to generate €500 million in its first year.

Claiming such a tax is a question of “fiscal justice” and a way to “build 21st century taxation”, Le Maire failed last week to convince at least four Euro countries (Ireland, Sweden, Denmark, Finland) and was therefore unable to get a green light from the EC for a Euro tax on tech companies’ revenues.

He is now seeking to obtain a common position from European representatives at the Organization for Economic Co-operation and Development (OECD) ahead of a worldwide agreement that could be concluded by the end of 2019. “As soon as an agreement is set up by OECD, the fiscal rules will take the place of our French tax,” explained Lemaire. While Google, Amazon or Facebook are headquartered in more tax-friendly Ireland, Le Maire reiterated his clear opposition to ‘fiscal dumping inside the EC’, seeing it as a weakness.

This tech tax has not to be confused with the so-called YouTube OTT video tax, set up in France in early 2018 and applied to all platforms such as YouTube, Netflix, or Prime Video, so as to help fund local movies. Limited to 2 per cent and paid to funding body CNC, it is based on the ad revenues generated in France from the online streaming of audiovisual content. In 2018 it brought €10 million to the CNC.

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